Bayviews growth is constrained by mountains onone side and

Chapter , Problem 5-105

(choose chapter or problem)

Bayviews growth is constrained by mountains onone side and the bay on the other. A bridge acrossthe bay is planned, but which plan is best? It canbe built with a single deck to meet the needs of thenext 20 years, or it can be built with two decks tomeet the needs of the next 50 years. The piers canalso be built to support two decks, but with onlyone deck being built now.Building it all now will cost$160M,and leav-ing the top deck for later will save $40M. Building that top deck later will cost $70M including thecost of traffic disruption. A single-deck bridgewill cost $100M now and $115M in 20 years.Deck maintenance is $1.4M per year per deck.Pier maintenance is $1.2M per year per bridge.If the interest rate is 5%, which design should bebuilt?If the two-deck bridge is built immediately,then dedicated lanes for buses, carpools, and bicy-cles can be added. To economically evaluate thisuse, estimate the cost of the underutilized capacityfor the bridge